Agent Experience, Training Could Affect Home Sale

(Friday, January 05, 2007) - Just after the holidays, I decided to preview a few homes in the area to see what's available in my market area as we approach the new year. What I found is a phenomenal selection of houses with various amenities and value adds. What was disheartening was the apparent lack of market knowledge of either the agent or the unwillingness of some sellers to get with the program on how much their homes are worth.

For instance, I was looking at three houses in the $635,000 range all located within 4 miles of each other in Prince William County, Virginia -- a suburb of Washington, D.C. They each had at least more than 2 acres of land, 4 bedrooms, two-car garage, finished basement with a home office space, deck, etc.

The cheapest property was the largest, with a three-car garage and a level lot. It was also in move-in condition with all new decor and was only 7 years old. The other two were more than 20 years old, but had wooded lots. Most interestingly was that the cheapest house also had the highest tax assessment. Both the agent and the seller seem to be on target on this property, which is priced $5,000 less than its nearest competitor and $15,000 less than the highest priced comparable.

The one with the largest lot seems to be the most overpriced property. The seller seems to think that the extra treed, hilly acres (you can't do anything with them) makes the house worth more. I learned many years ago from a very experienced agent that you have to be careful about pricing property because of the lot size. "You can't live on a lot," she said.

A quick comparative market analysis of the five-acre property revealed that an identical home with the same lot size sold three months ago for $74,000 less than this seller's asking price. Where is the owner coming from? Why did the agent even take the listing?

Agents working in a buyers market need to look at solds in the last 60 days -- no further back. Then take a temperature on the pending sales -- which houses are drawing contracts? More than likely there will be a correlation between the houses priced low enough to draw offers and the pending sales.

In addition, compare tax assessments and the sold prices. In today's market, more than likely, the sold prices will be substantially under the tax assessments. The above houses provide a good example. The cheapest, but newest house is priced $59,000 under the tax assessment. Meanwhile, the other two properties are $39,950 and $84,000 over their tax assessments.

Nevertheless, a buyer agent who will do his or her homework can get their buyer into a great property, if they're willing to take on the owner and agent of an overpriced listing and do the hard work of negotiation, telling people face-to-face that their home is way overpriced.

As you approach your home-buying and selling for next year, be sure you get an agent who has the training and experience on pricing. At this point in the game, while condition and location are important, one element of the home selling equation is moving properties -- price.

Thus, here's my New Year's advice -- pick an agent who really demonstrates they have a handle on the market. For sellers, this would be the agent who doesn't necessarily come in with the highest price to "buy" your listing. For buyers, the agent would be one who knows where prices should be and is willing to make what might be considered "low-ball" offers to get you into the house you want.

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